PENSION FORMULA: Implement it in stages for now

NST

2009/11/23

M.G., Kuala Lumpur

I REFER to your report "Pensioners want PM to settle formula" (NST, Nov 19) saying that a group of more than 60 pensioners from Penang had urged the government to intervene in their longstanding request for a revised formula to calculate pensions based on years of service.

The group coordinator, S. Arumugam, was reported as saying that they hoped the prime minister would look into the plight of 210,000 civil servants who would benefit if the formula was implemented and that the pensioners were upset by a statement by the Public Service Department's post-service director that the government could not afford higher pensions as it would burden taxpayers.

If implementing the revised pensions' formula in full would burden the government, it could be implemented in stages, as was done previously, where the calculation of pension was increased from one based on a maximum of 25 years' service to the current maximum of 30 years.

Currently, the maximum number of years of service served by any pensioner is 41 years. The maximum number of years of service considered for computation of pension could be raised from the current 30 years to 35 years and later. When the economy has sufficiently recovered, it could be revised again so as to base it on the actual number of years of service.

The 210,000 pensioners (out of a total of 547,000 pensioners in Malaysia -- representing less than 50 per cent of the pensioners) who stand to benefit if the pensions were based on the actual number of years of service are people who would have joined the service when they were between 15 and 19 years old. They are the ones who joined the service after primary or secondary-school education on a lower salary scale, unlike those with 25 to 30 years of service who would have joined later between the ages of 21 and 26 years after they acquired a tertiary education that would have placed them on a higher salary scale.

These pensioners drawing smaller pensions have been especially hit by the economic downturn, more so those who served in junior positions in urban areas and retired there after acquiring a low-cost house or apartment, and exhausting their savings on their children's education.

The cost of living has shot up, especially in urban areas, and many have got into debt through borrowing. It will be an act of compassion to help these poor pensioners who have faithfully served the government for the best part of 30 to 40 years of their lives.